California Federal Court Grants Preliminary Injunction of State Law Banning Mandatory Arbitration of Employment Disputes
By Dan Ernst
In an initial victory for California employers, a California federal court granted a preliminary injunction blocking enforcement of the recently passed California Assembly Bill 51 (“AB 51”),FN1 which banned mandatory arbitration of employment disputes. On January 31, 2020, the Court issued an order enjoining the enforcement of sections of the law including Labor Code § 432.6(a), which provides that:
“A person shall not, as a condition of employment … require any applicant … [or] employee to waive any right, forum, or procedure for a violation of any provision of the California Fair Employment and Housing Act … including the right to file and pursue a civil action or complaint….”FN1
The parties requesting the injunction, including the U.S. Chamber of Commerce, California Chamber of Commerce, the National Retail Federation and the California Retailers Association, argued that California’s law is preempted by the Federal Arbitration Act, 9 USC §§ 1-16. The Court issued a minute order granting the preliminary injunction in full and stated that it will explain its reasoning in a detailed order in the coming days.FN2
Takeaway
This preliminary injunction means that California cannot enforce AB 51’s anti-arbitration provisions while the parties seek a ruling on whether those provisions must be permanently barred from enforcement. This ruling may also have positive implications for employers in states where similar legislation may be introduced in the future. Campbell Litigation will be monitoring this matter and will provide updates.
Footnotes:
FN1: Assembly Bill 51 (AB 51), enacted at Cal. Gov. Code § 12953 and Cal. Labor Code § 432.6. See
https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=201920200AB51.
FN2: See Chamber of Commerce of the United States, et al. v. Becerra, et al., No. 2:19-cv-02456-KJM-DB (E.D. Cal. Jan. 31, 2020).